Central Bank Halts Registration of Rural Creditors

Overwhelmed by the number of applications it has received from NGOs seeking to register as moneylenders, the National Bank of Cambodia (NBC) has temporarily suspended its campaign to gain better oversight of the rural economy as it catches up with inspections of those groups.

Khiev Bophaphuong, director of licensing at the NBC, said Monday that the Bank had received more than 400 applications from rural credit operators since it called on them to register as financial institutions in January, adding that 44 of those NGOs have been approved.

“Before we just had banks and microfinance institutions, but now we also have rural credit operators and so the number [of lenders] has increased a lot,” Ms. Bophaphuong said.

“So we are really tired,” she added. “If we lack people, we cannot conduct comprehensive inspections.”

The initiative to license more of the organizations lending to rural residents was meant to make it easier for the National Bank to track and regulate the expanding credit market outside the formal financial sector.

In a statement issued by the bank on Friday, it also says it plans to “revise some necessary regulations” related to the NGOs’ operations as it conducts assessments of the applications it has received.

Ms. Bophaphuong said that officials from the National Bank had visited about 180 rural lenders, and found that about 120 did not meet its standards for a financial firm.

“For example, those who don’t have credit provisions in their operations, but are charity organizations, do not relate to us and so they must stop providing credit,” she said.

For the firms that have been registered, the Bank is now working to impose more uniform interest rates, Ms. Bophaphuong added.

“We are currently asking them to lower the rate to a level that allows them and the people to survive.”

Kuy Sengmoeurn, CEO of the KAK Organization, which is already registered as a credit operator with the Ministry of Interior, said that the group’s application to register with the NBC was still pending approval.

“The central bank wants to know where we are from, whether we have experience in the sector and what amount of capital we have,” he said.

“I think that if we get the license, we would receive more confidence from our customers, the public and our partners.”

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